Designing Offsets Legislation: Recommendations of the Coalition for Emission Reduction Projects

Transcription

1 Designing Offsets Legislation: Recommendations of the Coalition for Emission Reduction Projects EPRI Greenhouse Gas Emissions Offset Policy Dialogue: Workshop 3 November 20, 2008 Washington, D.C. For more information Kyle Danish Van Ness Feldman kwd@vnf.com

2 Overview About CERP CERP approach to designing offsets legislation Project eligibility Additionality Quality vs. quantity limits Project approval and verification Crediting period Management of reversals International offsets Areas of continued work 2

3 About CERP Coalition to advocate for sound offsets policy in US federal cap-and-trade legislation Principles Offset projects are a key cost-saving element of any cap-andtrade program Offset projects should meet rigorous environmental standards Regulated companies should be able to use reductions/sequestration from projects that meet standards Any limits should be based on quality, not quantity Diverse membership, perspectives 3

4 CERP Members 4

5 Approach to Designing Offsets Legislation Legislation, not regulation Respect agency expertise Allow detailed determinations to be made in noticeand-comment rulemakings Need for certainty in certain areas Jump-start project development Facilitate compliance planning 5

6 Project Eligibility Eligible list Incorporate list of per se eligible project types Direct expedited agency development of standards, protocols Modification of eligible list Authority to add and remove project types Role for the Department of Agriculture Leverage USDA s expertise Authority to develop standards, protocols for agriculture and forestry projects 6

7 Additionality Frustration with project-by-project review Recommendations Definition of additionality : reductions or sequestration are additional to the extent not required by law Provide agency with discretion to establish performance standards or benchmarks 7

8 Quality vs. Quantity Limits Limits on offsets should be based on quality No rationale for preventing use of offsets that meet quality standards Rely on discipline of the emissions cap instead of arbitrary quantity limits Need for offsets will be most significant in beginning of program before availability of next generation technologies Authorize periodic Presidential review of offsets program Any quantity-based limits should apply to use of offsets, not issuance (as in S. 3036) Limits on issuance deter development of high-quality offsets because of year-to-year uncertainty 8

9 Project Approval and Project Verification Two distinct stages Approval: Full review of baseline, additionality, monitoring plan, etc. Verification: Periodic determination of the amount of reductions/sequestration achieved by approved project Verification should not involve full-scale re-review Within these parameters, avoid legislative prescription Allow reviewing agency to determine what information it needs 9

10 Crediting Period Considerations Strike a balance Responsiveness to changing circumstances, new laws; and Investment certainty Afforestation/reforestation involves longer uptake Recommendations 10 years with ability to renew Afforestation/reforestation: 30 years with ability to renew 10

11 Management of Reversals Considerations Program should account for reversal risk Manage risk cost-effectively Drawbacks to simple buyer liability or seller liability Recommendation: Buffer Reserve Calculate reversal risk for each project Withhold corresponding credits for each project and transfer to reserve For unintentional reversals, cancel credits in reserve Project representative is liable for intentional reversal Require reporting for length of crediting period + 5 years Agency auditing, regular review of reserve 11

12 International Offsets Considerations Permitting use of international offsets provides costcontainment, engagement benefits Fundamentally a matter of diplomacy Recommendations Provide for a Presidential rulemaking on use of international offsets Do not foreclose or constrain Presidential diplomacy in a time of international negotiations 12

13 Areas of Continued Work Additionality Positive list Early action / start date International forestry offsets 13

14 For more information: Kyle Danish